British pound sunk to its lowest level in more than a month against the dollar and euro, after an apparent breakdown in Brexit talks.
- By 10:30 a.m. London time, the British pound traded 0.47% lower against the dollar at $1.2235 as the reports emerged of a possible breakdown in talks.
The pound sterling fell sharply against the dollar Tuesday morning with several British media outlets reporting that Brexit talks were close to breaking down.
Sky News reported that German Chancellor Angela Merkel had told U.K. Prime Minister Boris Johnson that a deal for Brexit is now “overwhelmingly unlikely,” citing a Downing Street source.
In theory, there isn’t that much reason for today’s shift. The Prime Minister’s hands are theoretically tied by the Benn Act, so unless the Government goes down an unprecedented (and illegal path), traders’ minds will be focused on the longer-term question: if a General Election comes, what is a better options out of Johnson, who is expected to run on a no-deal ticket, and Jeremy Corbyn?
With the go-caveat that there could be a deal looking like an increasingly long shot, analysts may well focus more strongly on this dichotomy in the coming weeks. It will be a test of nerves for the markets, however — especially for currency traders.
As for stock markets, they’re already in a sad place, with even the stoic-looking FTSE shedding three-quarters of a percentage point amid chunky losses. Wall Street is looking very sour, so where it goes from here could depend a lot on what sounds come out of the China and the White House this evening.
That’s all from me today — thanks for following along. I’ll be back tomorrow morning with the latest news on business, markets and economics. Join me then!